Making investments that can be managed from the home

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There are many ways of making money while working from home and if time is short because a small business is being run or there are young children or older folk to care for, making investments that can be managed without stepping outside your front door is perfect.

All that is needed initially is a computer, reliable broadband access to the Internet and a willingness to learn about the types of investments that can be made. Apart from that it’s a question of deciding how much is available to invest and where are the best places to make those investments.

 

Allocating assets

Once the amount of money available has been determined it’s time to consider where these assets should be allocated. One thing that should be remembered before any cash is invested is that investments can go down as well as up.

As the purpose of investing from home is to make money it’s important to consider investing only as much as can be afforded to be lost. This will depend on the nature of the risk taken; in most cases investments will bear fruit, but as any financial adviser will warn, making a profit is not guaranteed.

Allocating assets means determining where the money for investment will go. By diversifying investments, in other words dividing them between different assets, an investor spreads the risk because all asset types do not behave in the same way. The point is to lessen the potential for losses; as the saying goes ‘don’t put all your eggs in one basket.’ If the basket drops all the eggs are lost.

What asset types are available?

There are four main asset classes for the home investor to consider, some are very easy to manage while others may take a little more time to start with, but become easier with time and experience.

• Gilts and corporate bonds – these are generally, but not always, low risk investments. Effectively you are loaning money to either the government or to a company seeking to raise capital. Both pay regular income as interest for a defined period of time, after which the loan is repaid to the investor. Corporate bonds usually pay a higher interest rate as it’s possible that the company may run into difficulties and default on the debt. It is extremely rare for a government to experience such problems, which is why interest rates are lower for this type of bond

• Real estate – investing in domestic property can be a good way to see an investment increase in value as well as bring in an income. The investment can be managed from home with the occasional visit to tenants where required, alternatively an agent can be hired to look after the property. It’s important to work through all the costs and potential returns. In good economic times property is usually a good investment both for income and a capital gain, though there always risks of a downturn that should be factored in.

• Equities – buying shares in a company is one of the oldest ways to invest and can bring a better return than investments in other asset groups. They are also considered to be the riskiest, because if a company fails it’s likely that all monies invested will be lost.

• Cash – it’s always a good idea to keep some assets in cash as it’s unlikely they will be lost. Being a low risk option, though high inflation may eat away at the actual value, returns may be comparably low but relatively stable. It’s best to search around for the best interest rates for savings and deposit cash there, but don’t expect huge returns, especially when interest rates are low.

Managing investments

Once asset allocation has been determined through careful investment planning, a financial adviser will help develop the appropriate portfolio in conjunction with the investor, ensuring he or she is able to keep track of how everything is progressing, from home.

Tracking the prices of shares is easily achieved as they are all listed on either company or other financial websites. Investors can soon get a feel for what is performing well. Keeping an eye on business and financial news will also be useful, making it easier to take key decisions on whether to sell in order to either make a profit or cut potential losses, as quickly as possible.

The real estate market should be monitored regularly to keep an eye on mortgage rates and price increases and to ensure that any option to increase rents on an annual basis is not missed. Cash investment accounts should be regularly checked out to ensure they are earning the highest rates of interest.

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